deposited my first rent checks... sure is a good feeling!!
Found out that some tenants are moving end of march, so I will have my first crack at finding/approving new tenants. Somewhat of a daunting task, haha.
@Kurt K. You’ve done everything the right way. Congrats!
The next deal you do has to be better than this one. The weak spot in this deal was the amount of down-payment in my opinion (20%). It’s not bad but you can improve on the next deal. Good for you Kurt
Thanks @Ben Leybovich .
The down came to 19860, after some prorating. so out of 125000 purchase the down percentage was 15.8%
But I love the challenge of finding one better than this for my next deal! My goal is $10,000/mo gross rents by 2018 and this 1 property gets me to 2500/mo now and I plan on getting rents to market for 3000/mo. So I'm excited that this first property has me well on my way (25-30%) to my goal.
BP is a great site for not only information but support from experienced people such as yourself. Thank you!
@Kurt K. Your goal is very doable. The most difficult part is going to be coming up with down-payments, which is why I encourage and challenge you to do your next deal with no more than 10% down.
But hold off. Manage and stabilize what you've got first. Automate things as much as possible. You've done well. Congrats!!!
Great Advice about the down payment choke point. And yes I plan on building a 6 month rent/expenses reserve before I look at any additional expanding. As well as there are a few small changes I want to make in my first property.
Luckily I have a "day job" where I should be able to save up for down payments if something were to pop up on the market before I had planned on being ready.
Hopefully I will have more to contribute to the site in the future as of now I'm mainly a "taker" of information :)
Had one of the tenants call about some possible repairs that they want done. I am going over to look at what he wants done tomorrow. It almost sounded like he wanted to do the repairs himself (I assume this is a bad idea??) but I'm not sure. I know that before purchasing the building their unit was very dirty. So I don't want to repair things cosmetically that will just get torn up again. Or can I suggest that they pay for the repairs that they want (if above the general wear and tear threshold?). How do you experience landlords handle these requests?
A lot of good answers here but one key is to remember that these properties are valued based on the income they produce rather than comps of single family houses.
Thanks for the reply Anthony P. I have already closed on the property and have been using this thread for continuing questions for people that have helped so far.
Maybe I will start a new thread for this repairs question (how easy is it to get the tenant to pay for a repair they want that is above normal wear and tear?) as this thread is starting to get a little lengthy.
Well, it's been about a year now, but this was a great thread. Do you have any fun/crazy tenant stories yet? I'd love to hear of any updates. Congrats on the purchase!
Nothing too crazy but it was a good first year. After about 2 months of ownership I raise the rents about $5,000 per year for the property. No tenants complained of the change, as rents hadn't been raised in a long time. Also about 2 months in one of the tenants was arrested and put in jail, but a relative came and took his stuff so I had a chance to remodel the kitchen in that unit. I also had incidence of a stubborn roof leak and the fitting that hooks up to the city water underground cracked and water was flooding around the sidewalk! Luckily have a repair guy/contractor that invests himself and had been taking care of the property for the previous owner so he has really helped with repairs and upgrades (buying cheap but durable materials, etc)
All in all a very good year. Luckily all of the repair "surprises" worked out just fine in the end. I only cash flowed a few thousand in the year but between the updates and principal pay off (on pace for a 9 year payoff) I actually was very happy with the cash flow + equity build up.
I'm looking forward to owning it free and clear. At that point it should cash flow roughly $18,000 a year.
I am also looking to possibly buy 15 out of 18 units from another person. So that would in effect meet my goal 4 years ahead of schedule. Still very early in the process, but hopefully something will come of it. If this deal were to happen, I would reach financial independence (cash flow from rentals much more than living expenses) in 10 or less years from now! Hoping for a good 2014!
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